Short answer. The cause of a remuneratory contract is the service or benefit which is remunerated. Under the Civil Code, when a contract is entered to compensate or reward a past service, the legal cause is not an exchange of future obligations — it is the prior service itself that the contract now recognizes and pays for.
What the law says
in remuneratory ones, the service or benefit which is remunerated
Civil Code, Article 1350 — Cause of Contracts. Read the full provision →
What a remuneratory contract is
A remuneratory contract is one where one party agrees to compensate the other for a service or benefit that has already been rendered — not one that is promised in the future. The reward flows from a prior act. An example: an employer who promises a bonus to an employee who already saved the company from a major loss is entering a remuneratory arrangement. The employee's past service is the cause; the employer's payment is the return. This distinguishes remuneratory contracts from ordinary employment agreements, where future services are the cause.
How this differs from an onerous contract
In an onerous contract, both parties exchange obligations at the same time — the cause for each party is what the other promises to do. In a remuneratory contract, the sequence is reversed: one party has already acted, and the contract now provides the reward for that past action. Article 1350 identifies the cause of a remuneratory contract as the service or benefit which is remunerated — the thing that was already done. The reward being promised is the obligation; the past service is what makes it legally cognizable and binding.
Why cause matters for remuneratory arrangements
Understanding the cause of a remuneratory contract matters for several practical reasons. First, it determines whether the arrangement is valid — the past service must be real and lawful. A promise to reward someone for an illegal act has an unlawful cause. Second, it helps determine whether the contract can be attacked as a donation in disguise: a genuine remuneratory contract rests on a real prior service, while a simulated one may actually be a donation that must follow different formalities. Third, it affects how disputes about the arrangement are analyzed — the existence and extent of the prior service become central facts.
Distinguishing remuneratory contracts from donations
A key practical question that arises with remuneratory contracts is whether they are genuinely compensating a prior service or are effectively donations dressed up in contractual language. If the "service" is trivial or the "compensation" is grossly disproportionate, courts may look more carefully at the true character of the arrangement. Contracts of pure beneficence — whose cause is simply the giver's generosity — have their own legal requirements, including formal requirements for donations. If what is presented as a remuneratory contract is actually a donation, those requirements apply. The substance, not the label, controls.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Perpetua Vda. De Ape vs. The Honorable Court of Appeals, et al, G.R. No. 133638, April 15, 2005 — read the decision on LawPhil →
- SM Land, Inc. vs Bases Conversion and Development Authority and Arnel Paciano D. Casanova, Esp., in his official capacity as President andn CEO of BCSA, G.R. No. 203655, March 18, 2015 — read the decision on LawPhil →
- Hon. Heherson T. Alvarez vs. PICOP Resources, Inc, G.R. No. 162243, December 3, 2009 — read the decision on LawPhil →
- Barceliza P. Capistrano vs. Darryl Limcuando, et al, G.R. No. 152413, February 13, 2009 — read the decision on LawPhil →